Telit wins share of IBM-led project estimated at €30m

Telit Communications plc (AIM: TCM) last week signed an agreement with global computer giant IBM (NYSE: IBM) to develop modular general packet radio services (GPRS). The services are designed for a new automatic meter reading (AMR) project in Europe, estimated at €30 million.

Under the terms of the contract, Telit will lead the R&D of a GPRS based communications solution as part of the AMR project. The Telit designed AMR solution allows for automated meter readings, whereby energy providers will be able to read their customers' electricity and gas meters through M2M ("machine to machine") wireless communication. Telit's GPRS modules will be integrated into electricity meters in households in Europe as part of the AMR rollout within the utility sector.

Due to the extensive R&D necessary for the project, Telit's patented module will be an integral part of the design and functionality of the AMR device.

Telit CEO Oozi Cats commented, "Telit's data products division is at the forefront of innovation in this exciting and lucrative sector. This agreement with one of the world's leading system integrators further emphasizes the need for M2M GPRS products, and we are proud to have been selected as the major supplier for this important project.”

At present, modules constitute only a small proportion of revenue, and generate losses, but they are expected to be Telit’s growth engine. The contract with IBM is therefore very important for the company. Meanwhile, Telit’s report for the first half of 2005 shows only slight progress in this direction. Revenue totaled €36.6 million, 23% more than in the corresponding period last year. Most growth was in the wireless device market.

Published by Globes [online] - www.globes.co.il - on October 2, 2005